Kraft 2008 Annual Report Download - page 65

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The 2006 effective tax rate includes the previously discussed $337 million reimbursement from Altria for federal tax reserves no longer required along with net
state tax reserve reversals of $39 million. The 2006 tax rate also benefited from the resolution of various tax items in our foreign operations, dividend repatriation
benefits, joint venture earnings, and lower foreign tax rates enacted in 2006 (primarily Canada). These benefits were partially offset by state tax expense and by
the tax costs associated with our 2006 divestitures.
The 2005 effective tax rate includes tax benefits of $117 million from dividend repatriation including the impact from the American Jobs Creation Act of 2004,
the resolution of outstanding items in our international operations, and the settlement of an outstanding U.S. tax claim. The 2005 tax rate also benefited from our
2005 divestitures, which was partially offset by state tax expense.
The tax effects of temporary differences that gave rise to deferred income tax assets and liabilities consisted of the following at December 31, 2007 and 2006:
2007 2006
(in millions)
Deferred income tax assets:
Accrued postretirement and postemployment benefits $ 1,408 $ 1,531
Other 1,841 1,690
Total deferred income tax assets 3,249 3,221
Valuation allowance (105) (100)
Net deferred income tax assets $ 3,144 $ 3,121
Deferred income tax liabilities:
Trade names (4,359) (4,157)
Property, plant and equipment (1,398) (1,627)
Prepaid pension costs (576) (161)
Other (1,060) (758)
Total deferred income tax liabilities (7,393) (6,703)
Net deferred income tax liabilities $ (4,249) $ (3,582)
Note 6. Capital Stock:
Our articles of incorporation authorize 3.0 billion shares of Class A common stock, 2.0 billion shares of Class B common stock and 500 million shares of
preferred stock. Shares of Class A common stock issued, repurchased and outstanding were:
Shares Issued
Shares
Repurchased
Shares
Outstanding
Balance at January 1, 2005 555,000,000 (29,644,926) 525,355,074
Repurchase of shares - (39,157,600) (39,157,600)
Exercise of stock options and issuance of other stock awards 3,683,281 3,683,281
Balance at December 31, 2005 555,000,000 (65,119,245) 489,880,755
Repurchase of shares - (38,744,248) (38,744,248)
Exercise of stock options and issuance of other stock awards 4,836,138 4,836,138
Balance at December 31, 2006 555,000,000 (99,027,355) 455,972,645
Repurchase of shares - (111,516,043) (111,516,043)
Exercise of stock options and issuance of other stock awards - 9,321,018 9,321,018
Conversion of Class B common shares to Class A common shares 1,180,000,000 - 1,180,000,000
Balance at December 31, 2007 1,735,000,000 (201,222,380) 1,533,777,620
63
Source: KRAFT FOODS INC, 10-K, February 25, 2008 Powered by Morningstar® Document Research℠